In summary, this approach uses High, Medium, Low ratings (or numerical values like one, two, three) for each risk. For enhanced visual effect in related risk reporting, you could also attribute Red, Amber, Green ‘RAG’ ratings too. The approach in ‘Getting Started’ suggests using categories to help people think about impact in key areas, for example: > Your organisation’s ability to deliver its strategy > The effectiveness and efficiency of your operations > Effect on financials (lost income, increased costs) > Your reputation with key stakeholders (local, national, international) > Your levels of compliance with legal or regulatory requirements Don’t forget opportunities also need to be factored into the assessment. Whilst a financial impact could mean lost income, an opportunity within the emerging risk might lead to increased income. Great examples of this during the pandemic are the fantastic fundraising activities of people like the late Captain Sir Tom Moore. Ultimately the risk review will enable you to rank the risks. As a fictitious example of the Simple Approach, we considered a UK charity dependent on government funding working with a community based organisation overseas. We used the SWOT approach we outlined in the first publication to consider the threats and opportunities that organisation could use to rank emerging risks as follows: Emerging Risk
Threat
Opportunity
Local governments are Local organisations increasing restrictions on cannot survive without foreign funding. funding. Funding from the UK may not be possible/available in the future for smaller Community Based Organizations. Community Based Organizations are too small to meet UK regulatory requirements such as those around data protection and terrorist/sanctions lists.
Overall RAG
During the 2020 COVID pandemic capacity building has been done remotely. Funding now to assist transformation into a fully registered local NGO will allow for future funding support.
RED – Even with our assistance, the local organisation may not be able to transform quickly enough to allow for funding, and may not survive. Communities suffer as essential services are not delivered. Inability to meet the We have the opportunity AMBER – Small regulatory requirements to work with smaller investments now could may force us to stop organisations and minimise future risks with working with smaller assist them to develop much larger impact to partner organisations acceptable data the UK organization. as the reputational and management and other regulatory risk for the UK regulatory practices. As organisation is too high the organisations are to accept. small, implementation costs in time and money should be affordable.
The Developing Approach Slightly more advanced, you could use traditional risk assessment techniques based on potential impact and likelihood. This approach adopts a more graduated scale, usually 1 – 5 as recommended by the UK Charity Commission. 8
